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The envelope stress response (ESR) of Gram-negative enteric bacteria senses fluctuations in nutrient availability and environmental changes to avert damage and promote survival. It has a protective role towards antimicrobials but direct interactions between ESR components and antibiotic resistance genes have not been demonstrated. Here we report specific interactions between the two-component conjugative pilus expression (Cpx)RA signal transduction system and the recently described mobile colistin resistance (MCR-1) protein. Purified MCR-1 is specifically cleaved by the serine endoprotease DegP within a structurally conserved periplasmic bridging domain. Cleavage-site mutations in MCR-1 render derivatives either protease-resistant or degradation-susceptible with widely differing consequences for colistin resistance. Transfer of the degradation-susceptible mutant to strains that lack either DegP or its regulator CpxRA restores expression and colistin resistance. MCR-1 production in Escherichia coli induces a Cpx-dependent ESR and imposes growth restriction in strains lacking either DegP or CpxRA, effects that are reversed by transactive expression of DegP. MCR-1 production impairs bacterial motility indicating dissipation of cytoplasmic transmembrane potential. Indeed, growth in media with low pH dramatically increases both MCR-1-dependent phosphoethanolamine (PEA) modification of lipid A as well as colistin-resistance activity. In vitro transferase- and lipid A reconstitution-assays demonstrate that MCR-1 is highly active at acidic pH. Acquiring MCR-1 also renders strains more resistant to antimicrobial peptides. Thus, a conserved motif within MCR-1 induces components of the ESR to confer resilience to stimuili commonly encountered in the environment such as to changes in pH and towards antimicrobial peptides. Excipient allosteric activation of the DegP protease specifically inhibits growth of isolates carrying mcr-1 plasmids indicating that a targeted strategy can lead to the elimination of transferable colistin resistance in Gram-negative bacteria.

Virtual screening of protein-protein and protein-peptide interactions is a challenging task that directly impacts the processes of hit identification and hit-to-lead optimization in drug design projects involving peptide-based pharmaceuticals. Although several screening tools designed to predict the binding affinity of protein-protein complexes have been proposed, methods specifically developed to predict protein-peptide binding affinity are comparatively scarce. Frequently, predictors trained to score the affinity of small molecules are used for peptides indistinctively, despite the larger complexity and heterogeneity of interactions rendered by peptide binders. To address this issue, we introduce PPI-Affinity, a tool that leverages support vector machine (SVM) predictors of binding affinity to screen datasets of protein-protein and protein-peptide complexes, as well as to generate and rank mutants of a given structure. The performance of the SVM models was assessed on four benchmark datasets, which include protein-protein and protein-peptide binding affinity data. In addition, we evaluated our model on a set of mutants of EPI-X4, an endogenous peptide inhibitor of the chemokine receptor CXCR4, and on complexes of the serine proteases HTRA1 and HTRA3 with peptides. PPI-Affinity is freely accessible at https://protdcal.zmb.uni-due.de/PPIAffinity.

Household debt has played a central role in the global financial crisis, yet our understanding of it remains limited. We put U.S. household leverage in an international perspective, using household‐level data for the United States and 10 euro area economies. U.S. households have the highest prevalence of mortgage and consumer debt, hold comparatively large amounts and face higher debt burdens despite having higher income. We find that the U.S. economic environment is associated with a higher propensity to hold debt, primarily because a given level of collateral is associated with higher prevalence and larger amounts of mortgage debt in the United States.

Proteolysis is a key catalytic event in protein and thus cellular homeostasis. Despite the importance and wide implications of proteolytic processing and degradation, methods describing the degradation of folded proteins at high temporal and spatial resolution are not well established. However, this information is required to obtain a deep mechanistic understanding of proteolytic events and their consequences. Here, we describe an integrated method comprising time-resolved mass spectrometry, circular dichroism spectroscopy and bioinformatics to reveal the sequential degradation and unfolding of the model substrate annexin A1 by the human serine protease HTRA1. This workflow represents a general strategy for obtaining precise molecular insights into protease-substrate interactions that can be conveniently adapted to studying other posttranslational modifications such as phosphorylation in dynamic protein complexes.

The European Systemic Risk Board is charged with the macroprudential oversight of the financial system in the European Union. We compare and contrast the ESRB with the U.S. National Transportation ...

Central banks have used different types of forward guidance. This paper reports cross-country evidence showing that, in general, forward guidance mutes the response of government bond yields to macroeconomic news. However, calendar-based guidance with a short horizon counter-intuitively raises it. Using a stylized model where agents learn from market signals, it shows that the public release of more precise information about future rates lowers the informativeness of market signals and, as a consequence, may increase uncertainty and amplify the reaction of expectations to macroeconomic news.

Whether Federal Reserve Bank presidents have the right to vote on the U.S. monetary policy committee depends on a mechanical, yearly rotation scheme. Rotation is without exclusion: also nonvoting presidents attend and participate in the meetings of the committee. Does voting status change behavior? We find that the data go against the hypothesis that without the voting right, presidents use their public speeches and their meeting interventions to compensate for the loss of formal influence; rather, they support the hypothesis that the voting right makes presidents more involved. We also find that speeches move financial markets less in years that presidents vote. We argue that these discounts are consistent with their communication behavior.

Broad-spectrum antivirals are powerful weapons against dangerous viruses where no specific therapy exists, as in the case of the ongoing SARS-CoV-2 pandemic. We discovered that a lysine- and arginine-specific supramolecular ligand (CLR01) destroys enveloped viruses, including HIV, Ebola, and Zika virus, and remodels amyloid fibrils in semen that promote viral infection. Yet, it is unknown how CLR01 exerts these two distinct therapeutic activities. Here, we delineate a novel mechanism of antiviral activity by studying the activity of tweezer variants: the “phosphate tweezer” CLR01, a “carboxylate tweezer” CLR05, and a “phosphate clip” PC. Lysine complexation inside the tweezer cavity is needed to antagonize amyloidogenesis and is only achieved by CLR01. Importantly, CLR01 and CLR05 but not PC form closed inclusion complexes with lipid head groups of viral membranes, thereby altering lipid orientation and increasing surface tension. This process disrupts viral envelopes and diminishes infectivity but leaves cellular membranes intact. Consequently, CLR01 and CLR05 display broad antiviral activity against all enveloped viruses tested, including herpesviruses, Measles virus, influenza, and SARS-CoV-2. Based on our mechanistic insights, we potentiated the antiviral, membrane-disrupting activity of CLR01 by introducing aliphatic ester arms into each phosphate group to act as lipid anchors that promote membrane targeting. The most potent ester modifications harbored unbranched C4 units, which engendered tweezers that were approximately one order of magnitude more effective than CLR01 and nontoxic. Thus, we establish the mechanistic basis of viral envelope disruption by specific tweezers and establish a new class of potential broad-spectrum antivirals with enhanced activity.

Melanoma is a highly plastic tumor characterized by dynamic interconversion of different cell identities depending on the biological context. For example, melanoma cells with high expression of the H3K4 demethylase KDM5B (JARID1B) rest in a slow-cycling, yet reversible persister state. Over time, KDM5Bhigh cells can promote rapid tumor repopulation with equilibrated KDM5B expression heterogeneity. The cellular identity of KDM5Bhigh persister cells has not been studied so far, missing an important cell state-directed treatment opportunity in melanoma. Here, we have established a doxycycline-titratable system for genetic induction of permanent intratumor expression of KDM5B and screened for chemical agents that phenocopy this effect. Transcriptional profiling and cell functional assays confirmed that the dihydropyridine phenoxyethyl 4-(2-fluorophenyl)-2,7,7-trimethyl-5-oxo-1,4,5,6,7,8-hexa-hydro-quinoline-3-carboxylate (termed Cpd1) supports high KDM5B expression and directs melanoma cells towards differentiation along the melanocytic lineage and to cell cycle-arrest. The high KDM5B state additionally prevents cell proliferation through negative regulation of cytokinetic abscission. Moreover, treatment with Cpd1 promoted the expression of the melanocyte-specific tyrosinase gene specifically sensitizing melanoma cells for the tyrosinase-processed antifolate prodrug 3-O-(3,4,5-trimethoxybenzoyl)-(-)-epicatechin (TMECG). In summary, our study provides proof-of-concept for a new dual hit strategy in melanoma, in which persister state-directed transitioning limits tumor growth and plasticity and primes melanoma cells towards lineage-specific elimination.

Startling reports described the paradoxical triggering of the human mitogen-activated protein kinase pathway when a small-molecule inhibitor specifically inactivates the BRAF V600E protein kinase but not wt-BRAF. We performed a conceptual analysis of the general phenomenon "activation by inhibition" using bacterial and human HtrA proteases as models. Our data suggest a clear explanation that is based on the classic biochemical principles of allostery and cooperativity. Although substoichiometric occupancy of inhibitor binding sites results in partial inhibition, this effect is overrun by a concomitant activation of unliganded binding sites. Therefore, when an inhibitor of a cooperative enzyme does not reach saturating levels, a common scenario during drug administration, it may cause the contrary of the desired effect. The implications for drug development are discussed.

The HTRA1 gene encoding an evolutionary conserved protein quality-control factor can be epigenetically silenced or inactivated by mutation under pathologic conditions such as cancer. Recent evidence suggests that the loss of HTRA1 function causes multiple phenotypes, including the acceleration of cell growth, delayed onset of senescence, centrosome amplification, and polyploidy, suggesting an implication in the regulation of the cell cycle. To address this model, we performed a large-scale proteomics study to correlate the abundance of proteins and HTRA1 levels in various cell cycle phases using label-free-quantification mass spectrometry. These data indicate that the levels of 4723 proteins fluctuated in a cell-cycle-dependent manner, 2872 in a HTRA1-dependent manner, and 1530 in a cell-cycle- and HTRA1-dependent manner. The large number of proteins affected by the modulation of HTRA1 levels supports its general role in protein homeostasis. Moreover, the detected changes in protein abundance, in combination with pull-down data, implicate HTRA1 in various cell cycle events such as DNA replication, chromosome segregation, and cell-cycle-dependent apoptosis. These results highlight the wide implications of HTRA1 in cellular physiology.

The serine protease HTRA1 is involved in several vascular diseases and its expression is often deregulated in cancer. We aimed at identifying how HTRA1 in the vasculature affects tumor growth. Here we report that silencing of HTRA1 in cultured endothelial cells increased migration rate and tube formation, whereas forced HTRA1 expression impaired sprouting angiogenesis. Mechanistically, endothelial HTRA1 expression enhanced Delta/Notch signaling by reducing the amount of the weak Notch ligand JAG1. HTRA1 physically interacted with JAG1 and cleaved it within the intracellular domain, leading to protein degradation. Expression of a constitutive active Notch1 prevented the hypersprouting phenotype upon silencing of HTRA1. In HtrA1-deficient mice, endothelial Notch signaling was diminished and isolated endothelial cells had increased expression of VEGF receptor-2. Growth of syngeneic tumors was strongly impaired in HtrA1-/- mice. The tumor vasculature was much denser in HtrA1-/- mice and less covered with mural cells. This chaotic and immature vascular network was poorly functional as indicated by large hypoxic tumor areas and low tumor cell proliferation rates. In summary, inhibition of HTRA1 in the tumor stroma impaired tumor progression by deregulating angiogenesis.

Inflation targeting is implemented in different ways – typically by adopting point targets, with or without tolerance bands, or by specifying target ranges. Using data for 20 economies (half of which are advanced and emerging market economies, respectively), this paper tests whether the various target types anchor inflation expectations differently. By studying to what extent inflation expectations are responsive to past inflation and how much forecasters disagree, it tests two contradictory hypotheses, namely that targets with intervals lead to (i) less anchoring, e.g. because they provide more flexibility to the central bank, or (ii) better anchoring, because they are missed less often, leading to an enhanced credibility. The evidence refutes the first hypothesis, and generally finds that target ranges or (in some cases) tolerance bands outperform the other types. However, the effects partially depend on the economic context and no target type consistently outperforms all others. This suggests that there are some benefits to adopting intervals, but the central bank can anchor inflation expectations also by other means.

This paper analyzes stock market trading in 15 countries during the 2010 and 2014 soccer FIFA World Cups. We find evidence for substantial investor inattention during these major sporting events. The lack of attention for the trading pit is particularly large when the national soccer team is competing, with traded volumes declining by as much as 48%. During national team matches, prices on local stock markets can temporarily decouple from global financial market developments. These findings suggest that major sporting events can act as a laboratory in which to investigate investor inattention.

This paper provides novel evidence on the role of the macroeconomic environment for households’ choice between fixed-interest-rate and adjustable-interest-rate mortgages (ARMs) in the euro area. We find that relatively more ARMs are taken out when economic growth is strong, the interest rate spread is high, or unemployment shows low volatility. A simulation exercise shows that a reduction in mortgage rates as witnessed during the monetary easing in the course of the global financial crisis produces a substantial decline in debt burdens among mortgage-holding households, especially in countries where households have higher debt burdens and a larger share of ARMs.

The efficient intracellular delivery of (bio)molecules into living cells remains a challenge in biomedicine. Many biomolecules and synthetic drugs are not able to cross the cell membrane, which is a problem if an intracellular mode of action is desired, for example, with a nuclear receptor. Calcium phosphate nanoparticles can serve as carriers for small and large biomolecules as well as for synthetic compounds. The nanoparticles were prepared and colloidally stabilized with either polyethyleneimine (PEI; cationic nanoparticles) or carboxymethyl cellulose (CMC; anionic nanoparticles) and loaded with defined amounts of the fluorescently labelled proteins HTRA1, HTRA2, and BSA. The nanoparticles were purified by ultracentrifugation and characterized by dynamic light scattering and scanning electron microscopy. Various cell types (HeLa, MG-63, THP-1, and hMSC) were incubated with fluorescently labelled proteins alone or with protein-loaded cationic and anionic nanoparticles. The cellular uptake was followed by light and fluorescence microscopy, confocal laser scanning microscopy (CLSM), and flow cytometry. All proteins were readily transported into the cells by cationic calcium phosphate nanoparticles. Notably, only HTRA1 was able to penetrate the cell membrane of MG-63 cells in dissolved form. However, the application of endocytosis inhibitors revealed that the uptake pathway was different for dissolved HTRA1 and HTRA1-loaded nanoparticles.

The paper analyzes the integration of euro area sovereign bond markets during the European sovereign debt crisis. It tests for contagion (i.e., an intensification in the transmission of shocks across countries), fragmentation (a reduction in spillovers) and flight-to-quality patterns, exploiting the heteroskedasticity of intraday changes in bond yields for identification. The paper finds that euro area government bond markets were well integrated prior to the crisis, but saw a substantial fragmentation from 2010 onward. Flight to quality was present at the height of the crisis, but has largely dissipated after the European Central Bank's (ECB's) announcement of its Outright Monetary Transactions (OMT) program in 2012. At the same time, Italy and Spain became more interdependent after the OMT announcement, providing our only evidence of contagion. This suggests that countries have been effectively ring-fenced, and Italy and Spain benefited from the joint reduction in yields following the OMT announcement.

Rupture of endosomes and lysosomes is a major cellular stress condition leading to cell death and degeneration. Here, we identified an essential role for the ubiquitin-directed AAA-ATPase, p97, in the clearance of damaged lysosomes by autophagy. Upon damage, p97 translocates to lysosomes and there cooperates with a distinct set of cofactors including UBXD1, PLAA, and the deubiquitinating enzyme YOD1, which we term ELDR components for Endo-Lysosomal Damage Response. Together, they act downstream of K63-linked ubiquitination and p62 recruitment, and selectively remove K48-linked ubiquitin conjugates from a subpopulation of damaged lysosomes to promote autophagosome formation. Lysosomal clearance is also compromised in MEFs harboring a p97 mutation that causes inclusion body myopathy and neurodegeneration, and damaged lysosomes accumulate in affected patient tissue carrying the mutation. Moreover, we show that p97 helps clear late endosomes/lysosomes ruptured by endocytosed tau fibrils. Thus, our data reveal an important mechanism of how p97 maintains lysosomal homeostasis, and implicate the pathway as a modulator of degenerative diseases.

Covering: 1989 up to 2019 Ahp-cyclodepsipeptides (also known as Ahp-containing cyclodepsipeptides, cyanopeptolins, micropeptins, microginines, and lyngbyastatins, and by many other names) are a family of non-ribosomal peptide synthesis (NRPS)-derived natural products with potent serine protease inhibitory properties. Here, we review their isolation and structural elucidation from natural sources as well as studies of their biosynthesis, molecular mode of action, and use in drug discovery efforts. Accordingly, this summary aims to provide a comprehensive overview of the current state-of-the-art Ahp-cyclodepsipeptide research.

Despite the availability of hundreds of antibiotic drugs, infectious diseases continue to remain one of the most notorious health issues. In addition, the disparity between the spread of multidrug-resistant pathogens and the development of novel classes of antibiotics exemplify an important unmet medical need that can only be addressed by identifying novel targets. Herein we demonstrate, by the development of the first in vivo active DegS inhibitors based on a pyrazolo[1,5-a]-1,3,5-triazine scaffold, that the serine protease DegS and the cell envelope stress-response pathway σE represent a target for generating antibiotics with a novel mode of action. Moreover, DegS inhibition is synergistic with well-established membrane-perturbing antibiotics, thereby opening promising avenues for rational antibiotic drug design.

Excessive aggregation of proteins has a major impact on cell fate and is a hallmark of amyloid diseases in humans. To resolve insoluble deposits and to maintain protein homeostasis, all cells use dedicated protein disaggregation, protein folding and protein degradation factors. Despite intense recent research, the underlying mechanisms controlling this key metabolic event are not well understood. Here, we analyzed how a single factor, the highly conserved serine protease HTRA1, degrades amyloid fibrils in an ATP-independent manner. This PDZ protease solubilizes protein fibrils and disintegrates the fibrillar core structure, allowing productive interaction of aggregated polypeptides with the active site for rapid degradation. The aggregate burden in a cellular model of cytoplasmic tau aggregation is thus reduced. Mechanistic aspects of ATP-independent proteolysis and its implications in amyloid diseases are discussed.

Bioactive natural products are important starting points for developing chemical tools for biological research. For elucidating their bioactivity profile, biological systems with concise complexity such as cell culture systems are frequently used, whereas unbiased investigations in more complex multicellular systems are only rarely explored. Here, we demonstrate with the natural product Rotihibin A and the plant research model system Arabidopsis thaliana that unbiased transcriptional profiling enables a rapid, label-free, and compound economic evaluation of a natural product's bioactivity profile in a complex multicellular organism. To this end, we established a chemical synthesis of Rotihibin A as well as that of structural analogues, followed by transcriptional profiling-guided identification and validation of Rotihibin A as a TOR signaling inhibitor (TOR=target of rapamycin). These findings illustrate that a combined approach of transcriptional profiling and natural product research may represent a technically simple approach to streamline the development of chemical tools from natural products even for biologically complex multicellular biological systems.

RATIONALE Mass spectrometry (MS) is an invaluable tool for the analysis of proteins. However, the sheer amount of data generated in MS studies demands dedicated data-processing tools that are efficient and require minimal user intervention. METHODS Utilities for Mass Spectrometry Analysis of Proteins (UMSAP) is a graphical user interface designed for efficient post-processing of MS result files. The software is written in Tcl/Tk and can be used in Windows, OS X or Linux. No third party programs or libraries are required. Currently, UMSAP can process data obtained from proteolytic degradation experiments and generates graphical outputs allowing a straightforward interpretation of statistically relevant results. RESULTS UMSAP is used here to analyze the proteolytic degradation of glycerophosphoryl diester phosphodiesterase GlpQ by the protein quality control protease DegP. Mass spectrometry was used to monitor proteolysis over time in the absence and presence of a peptidic allosteric activator of DegP. The software's output clearly shows the increased proteolytic activity of DegP in the presence of the activating peptide, identifies statistically significant products of the proteolysis and offers valuable insights into substrate specificity. CONCLUSIONS Utilities for Mass Spectrometry Analysis of Proteins is an open-source software designed for efficient post-processing of large datasets obtained by MS analyses of proteins. In addition, the modular architecture of the software allows easy incorporation of new modules to analyze various experimental mass spectrometry setups.

This paper studies consumers' inflation expectations using micro-level data from the Surveys of Consumers conducted by University of Michigan. It shows that beyond the well-established socio-economic factors such as income, age or gender, other characteristics such as the households …financial situation and their purchasing attitudes are important determinants of their forecast accuracy. Respondents with current or expected …financial difficulties, pessimistic attitudes about major purchases, or expectations that income will go down in the future have a stronger upward bias in their expectations than other households. However, their bias shrinks by more than that of the average household in response to increasing media reporting about inflation. Equivalent results are found during recessions.

Inflation targeting (IT) had originally been introduced as a device to bring inflation down and stabilize it at low levels. Given the current environment of persistently weak inflation in many advanced economies, IT central banks must now bring inflation up to target. This paper tests to what extent inflation expectations are anchored in such circumstances, by comparing across periods when inflation is around target, (persistently) high, or (persistently) weak. It finds that under persistently low inflation, inflation expectations are not as well anchored as when inflation is around target: inflation expectations are more dependent on lagged inflation; forecasters tend to disagree more; and inflation expectations get revised down in response to lower-than-expected inflation, but do not respond to higher-than-expected inflation. This suggests that central banks should expect inflation expectations to behave differently than was the case previously, when inflation was often remarkably close to target in many advanced economies.

We analyze the transmission of the 2007 to 2009 financial crisis to 415 country-industry equity portfolios. We use a factor model to predict crisis returns, defining unexplained increases in factor loadings and residual correlations as indicative of contagion. While we find evidence of contagion from the United States and the global financial sector, the effects are small. By contrast, there has been substantial contagion from domestic markets to individual domestic portfolios, with its severity inversely related to the quality of countries� economic fundamentals. This confirms the �wake-up call� hypothesis, with markets focusing more on country-specific characteristics during the crisis.

Against the background of the current debate about fiscal sustainability in several advanced economies, this paper estimates the determinants of sovereign bond spreads of the G7 countries, using high-frequency proxies for market expectations about macroeconomic fundamentals. It allows for time-varying parameters and stochastic volatility as well as for asymmetry in the effects of countries’ fundamentals on yield spreads. The paper finds that there is substantial asymmetry in the importance of country fundamentals, which shrinks, the closer the two constituent bonds are to being substitutes. There are also considerable time variations in the role of the various determinants. In particular, there has been a reduced pricing of several risk factors in the years preceding the financial crisis, and either an over-pricing of risk or the pricing of catastrophic events like a break-up of the euro area and a re-denomination risk of euro area bonds during the European sovereign debt crisis.

Central banks often draft press releases announcing monetary policy decisions starting from the previous release. This makes it straightforward to see how the content has evolved, but may make substantial updates harder to interpret, as markets learn to expect only minor updates. Using variation in the drafting process at the Bank of Canada, this paper finds that similar press releases reduce market volatility, whereas volatility rises when substantial changes occur after sequences of similar statements. A comparison over time and across central banks shows that market sensitivity to similarity adjusts to the drafting practice of central banks.

Monetary policy communication is particularly important during unconventional times, because high uncertainty about the economy, the introduction of new policy tools and possible limits to the central bank’s toolkit could hamper the predictability of policy actions. We study how monetary policy communication should and has worked under such circumstances. Our main results relate to announcements of asset purchase programmes and the use of forward guidance. We show that announcements of asset purchase programmes have lowered market uncertainty, particularly when accompanied by a contextual release of implementation details such as the envisaged size of the programme. We also show that forward guidance reduces uncertainty more effectively when it is state‐contingent or when it provides guidance about a long horizon than when it is open‐ended or covers only a short horizon, and that the credibility of forward guidance is strengthened if the central bank also has embarked on an asset purchase programme.

The mechanistic details of the pathogenesis of Chlamydia, an obligate intracellular pathogen of global importance, have eluded scientists due to the scarcity of traditional molecular genetic tools to investigate this organism. Here we report a chemical biology strategy that has uncovered the first essential protease for this organism. Identification and application of a unique CtHtrA inhibitor (JO146) to cultures of Chlamydia resulted in a complete loss of viable elementary body formation. JO146 treatment during the replicative phase of development resulted in a loss of Chlamydia cell morphology, diminishing inclusion size, and ultimate loss of inclusions from the host cells. This completely prevented the formation of viable Chlamydia elementary bodies. In addition to its effect on the human Chlamydia trachomatis strain, JO146 inhibited the viability of the mouse strain, Chlamydia muridarum, both in vitro and in vivo. Thus, we report a chemical biology approach to establish an essential role for Chlamydia CtHtrA. The function of CtHtrA for Chlamydia appears to be essential for maintenance of cell morphology during replicative the phase and these findings provide proof of concept that proteases can be targeted for antimicrobial therapy for intracellular pathogens.

We study the determinants of trust in the European Central Bank (ECB) as measured by the European Commission's Eurobarometer survey, in particular during the global financial crisis and the European sovereign debt crisis. We find that the fall in trust in the ECB in crisis times can be rather well explained based on the pre-crisis determinants. We also show that the fall in trust reflected the macroeconomic deterioration, a more generalized fall in the trust in European institutions in the wake of the crisis, and the severity of the banking sector's problems, to which the ECB was associated in the public opinion.

We ask whether recent changes in monetary policy due to the financial crisis will be temporary or permanent. We present evidence from two surveys — one of central bank governors, the other of academic specialists. We find that central banks in crisis countries are more likely to have resorted to new policies, to have had discussions about mandates, and to have communicated more. But the thinking has changed more broadly — for instance, central banks in non-crisis countries also report having implemented macro-prudential measures. Overall, we expect central banks in the future to have broader mandates, use macro-prudential tools more widely, and communicate more actively than before the crisis. While there is no consensus yet about the usefulness of unconventional monetary policies, we expect most of them will remain in central banks’ toolkits, as governors who gain experience with a particular tool are more likely to assess that tool positively. Finally, the relationship between central banks and their governments might well have changed, with central banks “crossing the line” more often than in the past.

Inflation has been well contained over the last decades in most industrialized countries. This implies, however, that memories of high inflation are likely to fade, because over time larger parts of the population have never experienced high inflation, whereas those who have might forget. This paper tests whether memories of high inflation affect agents’ preferences about the importance attached to price stability, using a large database covering over 52,000 survey responses from 23 countries over the years 1981-2000. It finds that memories of hyperinflation are there to last, whereas those of less drastic inflation experiences tend to erode after around 10 to 15 years. The recent decline in the importance attached to price stability does therefore most likely reflect mitigated inflation concerns in an environment of low and stable inflation, but also the consequences of fading memories of high inflation. The longer central banks have successfully delivered price stability, the more important it is for them to engage in a proactive communication, especially with the younger generations, about the merits of low and stable inflation. JEL Classification: D10, E31, E52